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UPDATED: May 27, 2014 NO. 51 DECEMBER 19, 2013
Onset of 4G Era
The fourth-generation network is fueling competition among telecom operators
By Lan Xinzhen
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Failure to keep pace with the technological leap of the communications industry led to the fall of the then three giants. When 3G mobile Internet services became popular, Chinese consumers not only used mobile phones as a tool for voice communication, but also to access the Internet on-the-go.

While people can make video calls using 3G mobile phones by installing social network software like QQ and WeChat, the speed and image quality are not satisfactory. With the 4G network, video websites will find more development opportunities, and online education is likely to spread to more people.

The 4G network makes it possible for cellphones to remotely control computers through certain applications, which enables new kinds of interactions from long distance. Some people have even suggested the phasing out of cable television, as we can receive all the channels through 4G signals.

Eyeing the huge profits generated by the 4G business, smartphone vendors are scrambling to launch corresponding terminals. Some mobile phones from Huawei, ZTE and Samsung are already available in the business halls of China Mobile. Yet, aside from faster mobile Internet speed, these handsets do not have any significant difference from the previous 3G versions.

Network contest

There is controversy surrounding the MIIT's decision, since the 4G licenses are based on the TD-LTE standard, which is mainly developed by China Mobile. It's worth mentioning that China Mobile has started the construction of 4G network base stations one year in advance, which is unfair to China Unicom and China Telecom.

When 3G licenses were issued in 2009, China Mobile was designated to promote the homegrown TD-SCDMA network, while China Unicom and China Telecom got the permission to use WCDMA and CDMA2000 standards, which are mature technologies.

Faced with an incomplete TD-SCDMA industrial chain, China Mobile lost millions of customers to China Unicom and China Telecom. Despite the fact that it has more than 100 million users, the utilization rate of its 3G network is lower than 15 percent in many provinces. According to its 2012 financial report, only one fourth of data traffic came from its 2G and 3G networks.

This time, the laggard in the 3G battle is making up. At the beginning of this year, China Mobile announced a plan—expanding the coverage of the TD-LTE network to 100 cities, purchasing millions of sets of TD-LTE terminals, building 200,000 4G base stations, and covering a population of 500 million. In other words, it targeted at constructing the world's largest 4G network.

Considering the lessons learned in the 3G era, China Mobile is reluctant to adopt the homegrown TD-LTE network alone. That explains why the MIIT included all of the three major telecom providers into the TD-LTE standard.

However, the decision is against the interests of China Unicom and China Telecom.

"China Unicom has agreed to stick to the existing FDD-LTE network," said Chang Xiaobing, President of China Unicom, at its 2012 results announcement conference.

It will only take 10 billion yuan ($1.65 billion) to upgrade its current 3G base stations to 4G. Therefore, it's not necessary for China Unicom to run two parallel standards of 4G network.

On the other hand, China Telecom doesn't have such an edge. Even its 3G network has not yet achieved profitability, not to mention building up a brand-new 4G network. The operator, therefore, might need to rent 4G networks of other carriers under competitive pressure.

Compared with TD-LTE, China Telecom also prefers to get a FDD-LTE license. Now, executives from the two telecom providers are busy lobbying the MIIT to issue FDD-LTE licenses as soon as possible.

Email us at: lanxinzhen@bjreview.com

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